IPMX @ IIM Lucknow

Sustainable development is the kind of development which satisfies the current needs without endangering the future generations to satisfy their own. Sustainable development is a complex and multidimensional issue, which combines efficiency, equity, and intergenerational equity based on economic, social, and environmental aspects. These three aspects are fundamental to the concept of sustainability and are closely linked. Businesses operate in these spheres simultaneously and hence most affected by the sustainability as a strategic and competitive force.

Sustainability is no more just an issue or a point of differentiation for the businesses. Sustainability has become megatrend which is sweeping the business world off the very foundations they were thriving on. It is no more about launching a campaign or a plan or a vision, it has to be much more deep rooted, much bigger force to reckon with. World over winds of change have already started blowing. Over the past 10 years environmental issues have steadily affected the way businesses are seen or supposed to function. Earlier the only function a business was supposed to carry out was to make profits for the owners. But now it is expected from businesses to create sustainable value for all the stakeholders in the value chain including society.

In this globalized era, workforces and worldwide suppliers are creating environmental pressures. The rise of emerging economies has fuelled the competition for scarce resources emphasising prudent use of available resources. Carbon emissions, water, energy are no more local issues of a nation; these have become global issues as actions of one country affect other nations too. Investors have started looking environmental issues central to firm’s performance and they seek information on sustainable initiatives a firm is taking up. Customers have started valuing those companies more which are genuinely concerned about environment and society. More over government concerns is ever growing over the issues of climate change, food security, energy security, industrial pollution, natural resources depletion among others. This is bound to change the regulatory environment of a business if not presently then in near future. More and more companies are now moulding their strategy and taking up investment in energy efficiency, pollution control, carbon footprint reduction, renewable power which is going to change the competitive landscape once and for all. Venture investing in clean technology reached a nearly $9 billion annually in 2008 and it is picking up again after slowdown in 2009. The private-sector investment into the clean technology marketplace has been estimated at more than $200 billion a year—with fast growth not just in the United States and Europe but in China, India, and the developing world. G20 governments have earmarked some $400 billion of their $2.6 trillion in stimulus funds for clean technology and sustainability programs.

Even if in short term businesses ignore sustainability but in long term it will not be just competitive advantage but a business imperative.

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“Nothing in excess” goes the maxim often heard and taught. But in practice, we have exploited Earth’s resources like there’s no tomorrow. As a result, we are facing the consequences of our excesses manifested in Global warming, water scarcity and ruined ecosystems. Our cities have grown inorganically with huge asymmetries in their development. Just to put a figure to that; 30% of India’s 1.1 billion population lives in urban areas. Of that more than 70% resides in just 10% of the cities. Not only have the resources depleted at alarming rates, they have been grossly polluted.

‘Sustainability’ is the need of the hour. Sustainability is defined as “Meeting the needs of the present without compromising the ability of future generations to meet their own needs.” It’s all about using living in a way that resources serve us in perpetuity. So what do we need to do to live in a sustainable manner? We must reduce our ‘Ecological Footprint’. Ecological footprint a measure of humanity’s demand on nature and measures amount of land and water a given population needs to produce the resources it consumes and to absorb the wastes, using prevailing technology. A lot of green standards abound that tell us how to design our buildings in an environment friendly way. But what we actually need is better planning of our cities.

I refer to an article on building new cities in the 21^st century that compared two cities viz. Barcelona and Atlanta. Both are former Olympic hosts with populations of around 2.8 million and with roughly the same standard of living. Yet, the per capita ecological footprint of Atlanta is four times that of Barcelona! Indeed, Barcelona’s per capita environmental impact is lower than even that of many rural areas of Europe. In India the large cities are already bursting at the seams and every day newspapers are full of problems faced due to rampant in-migration. We cannot stop people from choosing where they want to live and work. The answer lies in creating sensible templates for urban planning.

So what should be our strategy for a sustainable future? We need to design compact cities and stop creating flat urban sprawls. Our Cities should have an optimized circulation plan alongwith an efficient Public transport built into the urban design. Studies suggest that reducing the sprawl and better public transport alone can bring in a 30% reduction in energy usage. Building sustainable cities would involve significant costs in modifications to existing city structures and building new cities. However, sustainable development must be treated as investment and not consumption. Only in this way will capital including our natural capital be available for future re-investment.

Neerad Swaroop